'Huge step' for oil exploration 'game changer'


Tribune Business Editor


An oil exploration "game changer" for the Bahamas took "a huge step forward" yesterday with the signing of a three-month exclusivity deal on a drilling joint venture.

Simon Potter, the Bahamas Petroleum Company's (BPC) chief executive, told Tribune Business it had reached agreement with "a highly respected, major international oil company" to begin negotiations on a potential exploration partnership that would result in the "spudding" of a well in waters south-west of Andros.

The Bahamian-based oil explorer will entertain no other parties during this period, with Mr Potter suggesting the exclusivity agreement was "indicative of how they view" BPC's project and its prospects of success.

He declined to name BPC's potential partner, citing confidentiality agreements, but it will pay BPC $250,000 per month for the duration of the initial exclusivity - netting the company a total $750,000. The prospective "farm-in" partner also has an option to extend the exclusivity for a maximum further three months, again paying the same rate.

Mr Potter said recent global oil price increases had boosted BPC's long-running joint venture partner search, with the increased margins and profits whetting the industry's appetite for offshore exploration.

"You and I have been talking about the interest a third party may or may not have in this project for quite some time now," he told Tribune Business. "It's [the exclusivity agreement] a huge step forward for the project, especially in the context of improving global oil prices and the thawing of the industry's attitude with respect to offshore oil exploration."

Mr Potter said the decline in oil prices over the past few years had driven the industry to focus on onshore oil exploration/production assets, which were closer to delivering success and cheaper to acquire.

The speed at which renewed interest in BPC's Bahamian licences had materialised into something tangible, he suggested, showed the company's prospects of success - and the potential quantity of commercially extractable oil - were among the industry's best.

"With the improvement in oil prices, those prospects that have survived the downturn, those projects of scale and commercial attraction, they will be among those to get support the soonest," Mr Potter said.

"The extent to which a major international oil company is actually prepared to pay for a period of exclusivity, for a period of time in which they are the sole party with which we will negotiate, is indicative of how they view the prospect.

"These companies don't spend money if they don't have to. To commit to us in this way, and seek a commercial arrangement, is obviously very positive."

BPC's rate of progress has heated up rapidly in the past week, with the company having also submitted its 'Environmental Authorisation' application for the necessary permits in that area to the Government last week.

The search for a joint venture partner, who will share the financial and technical burden of drilling its first exploratory well, is the second 'parallel path' that BPC has been working on for several years, and it is now moving forward on both fronts.

BPC's licence areas largely straddle the Bahamas' maritime border with Cuba, covering waters south-west of Andros, which is where that first exploratory well will be spudded.

Mr Potter told Tribune Business that the Bahamas would not have to wait for actual production to feel the economic impact of oil exploration within its territorial waters.

"The exploration [on the first well] will last for 90 days and cost up to $100 million, a considerable proportion of which will be spent locally in-country. That's an immediate benefit," the BPC chief executive pledged.

"I've been here seven years this year with a technical commitment to the project. It's a project of scale and meaningful exploration. It's a technical project as well as a potential game changer for the Bahamas.

"There are parts of the project we're very comfortable with progressing ourselves; the technical aspects of the project, the environmental and safety aspects of the project with the Government," Mr Potter continued.

"We're very happy to push that forward. But certainly a company with much greater resources than ours will provide greater assurance to the Government in terms of delivery of the project.

"From a technical point of view, a large company with more resources enhances our chances of success. We benefit, the project benefits, and the Government gets greater assurance from their participation."

Mr Potter readily acknowledged that "it's not a deal until it's done", with much work remaining for BPC to turn the exclusivity agreement into a binding joint venture with agreed commercial and technical terms.

Yet he reiterated: "This is a major step forward that a company of this stature is willing to reward us for this period of exclusivity."

The initial 90-day period will involve "a detailed technical evaluation of the company's licences in the Bahamas and, at the same time, seek to develop a commercial framework for a potential transaction".


DDK 5 years, 5 months ago

The beginning of the end.......... How COULD the Government?


Porcupine 5 years, 5 months ago

Will Bahamians stand up to the insanity? Bahamas National Trust? Minister of the Environment? Fisheries? Tourism? Dr. Sands at Health? Are there not enough thinking people here to put this stupidity to rest?


sheeprunner12 5 years, 5 months ago

The oil wells were drilled from the 1960s ......... are they going to just reopen them????


proudloudandfnm 5 years, 4 months ago

Bring it! Freeport needs the jobs! My resume is ready to go!


TheMadHatter 5 years, 4 months ago

...and how many pennies per hundred barrels will each Bahamian get in their bank account once the oil is being pumped out?



proudloudandfnm 5 years, 4 months ago

Well I hooe to get about 100 grand a year.

This is not a communist country. Bahamians will not simply get money for doing nothing. Royalties will go into the publc purse giving our government more money to waste and steal. I honestly do not care how much revenue our government gets. All they'll do is waste it. VAT is a few years old and Nassau still doesn't have reliable electric. Freeport is still dead as a door knob. More revenue simply means more money lost. Just bring it and let us get our jobs. Lord knows Freeport needs those damned jobs. And before anyone asks this is what Freeport does so obviously we'll be first in line for the jobs...


Porcupine 5 years, 4 months ago

Sorry, I have to disagree. So tourism was tried, and has failed, I would say, try again. The infrastructure is already there. All else is in place for a creative make-over. The future of survival is in ownership. Small businesses at least give the owners some semblance of control over their own lives. Oil jobs, rarely except for the execs. Freeport is still able to "come back" in some way shape or form that provides prosperity for most of it's people. This is what the government should encourage, without giving away the farm.


TheMadHatter 5 years, 4 months ago

If i get no money directly into my bank account every three months based on oil revenue - that i can withdraw and spend as i choose - then i will vote PLP next time regardless of any other factors whatsoever in the campaign. Even if the PLP candidate says he will sign the whole country (officially) over to Haiti, if oil pumping and i gats nuttin then i voting PLP.


Bahama7 5 years, 4 months ago

" Bahamians will not simply get money for doing nothing ".

Thats what the UAE guys have been doing for years with their oil money - you never know guys.

We could all be driving around in Ferrari's soon and be doing nothing.

Fantastic - get drilling BPC.


170200 5 years, 3 months ago

I have looked in to this and it is a fantastic opportunity for the Bahamas. A chance to wipe out the countrys debt and to provide the means to make all Bahamians lives improve. Renewable energy needs money, lots of it, oil revenue can pay for this. The chances of an oil spill is low, even if there was Cuba would be affected, not The Bahamas. Most people dont realise that the world`s busiest oil shipping channel goes straight through Bahamian territory. The whole of the Caribbean has realised the potential of this, lets not waste it. Lets hold the government to account what they do with the revenue, a sovereign wealth fund must be set up for the people. A chance in a generation


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